Code Brain | Corporate Culture Feels "Vague" — How Do You Make It Real? Six Steps to Building Organizational Culture

Corporate culture sounds "soft" — intangible, invisible — yet it is indispensable for long-term success. It imbues employees' work with meaning that transcends mere utility, sparking motivation and sustained commitment. How do you build culture, or more fundamentally, how do you arrive at the right mission, vision, and values? This article outlines a general process that may help managers diagnose culture at the team, unit, or company level.

By Michael Tushman, Professor of Business Administration at Harvard Business School; and Charles O'Reilly III, Professor of Organizational Behavior at Stanford Graduate School of Business

If culture is one of the keys to successful strategy execution, how should managers diagnose the unique norms and values of their organization? Imagine how a new member of an organization learns what matters and what they should do.

Below, we outline a general process for understanding how managers can diagnose the culture of a group or organization. Through this six-step method, managers can diagnose culture at the team, unit, or company level. While the diagnostic approach varies depending on the level of analysis, the process itself remains constant.

Step 1: Identify the key strategic challenges.

Step 2: Link the strategies for addressing these challenges to the critical tasks required to implement them.

Step 3: Identify the norms and values that will help accomplish the critical tasks.

Step 4: Diagnose the norms exhibited by the current culture.

Step 5: Identify the gap between the required norms and the existing norms.

Step 6: Develop an action plan to close the gap.

01 Step 1

The first step in diagnosing alignment is identifying the strategic challenges facing the unit. In defining a company's competitive advantage, answer the following diagnostic questions:

• Who are your customers, and what do they need?
• How is your target market segmented?
• How broad is your product or service offering within these segments?
• Why should customers choose your product or service over competitors'?
• What capabilities do you possess that are difficult for others to imitate?
• How will you make money in these segments?

Regardless of where one sits in the organizational hierarchy, the person (or team) conducting the diagnosis must first translate the answers to these questions into clear, concrete objectives.

02 Step 2

Once the strategic challenges for the team or individual have been laid out, the next step is to identify the critical tasks required to achieve each objective. When answering the following questions about task identification, be as specific as possible:

• What specific tasks are absolutely necessary to successfully execute the strategy?
• How much interdependence must exist across units to coordinate these tasks?
• Do I understand the workflow?
• Is this list complete and internally consistent?

03 Step 3

After listing the critical tasks, determine the norms that will need to be implemented in the future to ensure effective task completion. These norms are specific attitudes and behaviors that, when widely shared and deeply held by employees, directly facilitate the execution of critical tasks. For example, while general norms for some tasks might include customer service, quality, and flexibility, these terms are too vague to help employees truly understand how to act. Therefore, these norms must be defined in terms of the specific attitudes and actions required. This demands that managers think carefully about their genuine expectations and articulate them clearly, avoiding fashionable buzzwords to illustrate workplace standards.

What values, if embraced by the entire unit and believed by all members, would advance the completion of critical tasks? (Answer separately for each task listed.) What specific attitudes and behaviors are consistent with that value and would ensure the completion of critical tasks? Given the existing reward system, is it reasonable to expect people to cultivate such attitudes and behaviors?

We can see how important it is to understand the norms required for executing critical tasks in the case of a successful high-tech company from Silicon Valley. Historically, the company had pursued a strategy of being an industry pioneer, consistently developing innovative products with cutting-edge technology. However, when senior managers looked to the future, they realized their technological lead was being eroded. Although their products remained successful due to technical competitiveness, they were not perceived as reliable.

Moreover, customers viewed the company as arrogant and indifferent to their needs. Senior management discovered that to maintain leadership in the future, the company could not rely solely on its ability to innovate and develop new technologies; it also needed the capacity to continuously improve product lines and strengthen the reliability of customer service.

Management recognized that they had to reduce their current overemphasis on technology to achieve competitive success in the coming years. Quality, reliability, and customer service, alongside innovation, all needed to spread throughout the company. Rather than simply announcing that creativity would become part of the corporate culture, top management offered a specific definition: "Concentrate on finding new ways of doing things. Relentlessly pursue new products and methods. We constantly encourage new ideas."

They also provided concrete definitions for other necessary norms such as customer service and quality. Although the content of these definitions was widely known, not everyone in the organization clearly understood what the new norms meant or what behaviors they should adopt in their daily activities. Reinforcing quality meant people should take all necessary actions, even if it meant scrapping products or delaying schedules. Similarly, employees understood that creativity was not limited to technical staff. Managers should look for new ways of doing things and encourage their subordinates to do the same. This in turn enabled senior management to reward and recognize those who acted accordingly. Without effectively communicating these definitions, it would have been difficult to truly energize the entire organization.

04 Step 4

After identifying the norms necessary for future success, the next step is to assess the current culture. The purpose of this step is to identify the norms that reflect shared expectations within the unit, whether positive or negative.

We should pay particular attention to positive or negative norms — that is, those that help or hinder the execution of the critical tasks listed in Step 2. Managers and their teams should reflect on the diagnostic questions listed earlier and compile an inventory of current norms: Suppose a good friend joined your organization. If they asked what they should do to be perceived as a high performer, what advice would you give? If they asked what they should avoid doing to ensure they didn't fail, what would you say? What behaviors are actually rewarded in the organization (as opposed to what the organization claims to reward)? What does it really take to outperform others?

We can also adopt a more structured approach by assembling a small focus group of five to eight people familiar with the unit's culture to jointly identify its distinctive norms and values. Following a series of discussions with representative team members, we can determine which values are widely shared (breadth) and which are considered most important (intensity), thereby distinguishing the norms and values within the culture.

Please spend 60 minutes answering the following three questions to assess your own culture.

First, take 40 minutes to identify, from the team's perspective, the core norms and values you believe define the organization's cultural character. These should be five or six core values or beliefs that, in your experience, shape how the culture actually operates. They need not be what the executive layer publicly promotes, but should accurately describe the real situation. Please rank them by importance.

Now, spend 10 minutes identifying norms and values you believe the organizational culture should have but currently lacks. These should be standards or beliefs that you consider important for achieving the organization's key strategic objectives in the next two to three years, but which have not achieved broad consensus or deep acceptance. For example, these might be values that people pay lip service to but do not practice.

Now, spend 10 minutes listing what you consider important and what is actually rewarded within the organization. Based on your experience, what must one actually do to succeed in the company? What does management truly care about? If you were giving advice to a friend who had just joined the company, what would you tell them to do to succeed?

05 Step 5

After confirming both the required norms and those the organization currently possesses, we can compare them to identify gaps or inconsistencies.

• If left unchanged, will the norms present in the current culture hinder the execution of critical tasks?
• Are there norms essential to the completion of critical tasks that have not yet received adequate attention?
• Is there a disconnect between what we say is important and what the current culture actually reflects?

We should preserve norms that help achieve critical tasks and downplay those that create obstacles.

06 Step 6

The final step in the culture diagnosis process is to understand what has caused each significant gap between the norms that currently exist and those needed for future success.

• Is the current reward system aligned with the required norms?
• Can existing structures and systems support the adoption of new norms?
• Are the right outputs and processes being measured?
• Are the required norms consistent with employees' values and expectations?
• Do people have the necessary skills and motivation to cultivate new attitudes and behaviors?
• Is senior management consistently modeling and reinforcing the required norms?

Source: Winning Through Innovation: A Practical Guide to Leading Organizational Change and Renewal, Sichuan People's Publishing House. Abridged and published by ClecChina (ID: ClecChina).